If we look at the past, the summer months always saw more advantageous energy rates emerge. Lower demand for natural gas and electricity with warmer temperatures always caused prices to drop during this period. Now, however, we are seeing the opposite. In recent months, energy prices have risen abnormally and several high records have already been broken.
Low gas supplies in Europe.
With the high demand for gas in Asia, the price there was driven up. Lng ships thus preferred to carry their gas supplies to Asia rather than Europe because they could charge higher prices there. As a result, there was a reduced supply of Lng in Europe. In addition, maintenance work on certain gas facilities and various smaller incidents also contributed to the reduction in supply. Currently, European supplies are at their lowest level in 10 years, causing stress in the market. Finally, the rise in CO2 prices has also increased demand for natural gas, making coal less competitive.
Domino effect on electricity prices.
The price increase in the electricity sector is due to several factors. On the one hand, there was the recovery of economic activity after Covid-19, which increased the demand for electricity. Low production of wind power due to weather conditions in recent months, and maintenance work on power plants also played a role in the increase. Finally, much of the production of electricity also became a lot more expensive due to rising gas, coal and CO2 prices.
Longer-term energy prices.
Just as Covid-19 shook the energy market very quickly and unexpectedly, this phenomenon is something no one could have predicted. Current prices are on average 3 times higher than in the same period before Corona, which is unsustainable for many producers as well as entrepreneurs.
With winter just around the corner - and demand for natural gas and electricity set to increase again as a result - we do not expect energy prices to drop significantly this year. In the longer term, however, we do expect the market to stabilize. If natural gas prices fall back to normal levels when supplies increase again, this will have an equally positive effect on electricity rates.
Should you expect a higher energy bill?
The current price increase impacts the portion of energy purchased at a variable rate during this period. Consumptions for which the price was fixed at an earlier time are not subject to this variable price increase.
Odot always negotiates for its customers an energy contract in which a mix of variable and fixed prices is possible. This allows us as an energy manager to choose the right price formula at the right time.
Read here more about Odot's management of Electricity & Natural Gas.
Odot reduces your energy costs through a unique procurement model, supported by AI and innovative software. Our knowledge of the energy market, assures you the most advantageous rates, continuous price tracking and a contract that suits you.
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This can mean Odot for multisite companies, such as Link2Europe.
If we look at the past, the summer months always saw more advantageous energy rates emerge. Lower demand for natural gas and electricity with warmer temperatures always caused prices to drop during this period. Now, however, we are seeing the opposite. In recent months, energy prices have risen abnormally and several high records have already been broken.
Low gas supplies in Europe.
With the high demand for gas in Asia, the price there was driven up. Lng ships thus preferred to carry their gas supplies to Asia rather than Europe because they could charge higher prices there. As a result, there was a reduced supply of Lng in Europe. In addition, maintenance work on certain gas facilities and various smaller incidents also contributed to the reduction in supply. Currently, European supplies are at their lowest level in 10 years, causing stress in the market. Finally, the rise in CO2 prices has also increased demand for natural gas, making coal less competitive.
Domino effect on electricity prices.
The price increase in the electricity sector is due to several factors. On the one hand, there was the recovery of economic activity after Covid-19, which increased the demand for electricity. Low production of wind power due to weather conditions in recent months, and maintenance work on power plants also played a role in the increase. Finally, much of the production of electricity also became a lot more expensive due to rising gas, coal and CO2 prices.
Longer-term energy prices.
Just as Covid-19 shook the energy market very quickly and unexpectedly, this phenomenon is something no one could have predicted. Current prices are on average 3 times higher than in the same period before Corona, which is unsustainable for many producers as well as entrepreneurs.
With winter just around the corner - and demand for natural gas and electricity set to increase again as a result - we do not expect energy prices to drop significantly this year. In the longer term, however, we do expect the market to stabilize. If natural gas prices fall back to normal levels when supplies increase again, this will have an equally positive effect on electricity rates.
Should you expect a higher energy bill?
The current price increase impacts the portion of energy purchased at a variable rate during this period. Consumptions for which the price was fixed at an earlier time are not subject to this variable price increase.
Odot always negotiates for its customers an energy contract in which a mix of variable and fixed prices is possible. This allows us as an energy manager to choose the right price formula at the right time.
Read here more about Odot's management of Electricity & Natural Gas.